Pharma.Aero’s webinar on 18JUN20 examined the long-term outlook for life science air freight supply chains, and featured opinion leaders and experts from the pharma, digital, and cargo industries, as well as Wouter Dewulf, Academic Director C-MAT at the University of Antwerp, who enlisted the posthumous help of French Astrologer, Madame Soleil, when it came to predicting where the industry will be in 20 years from now, after a detailed look at the hard facts on hand.
It was the third and final webinar in the Stat Times / Pharma.Aero series that had previously looked at the short and mid-term effects of COVID-19 on pharma supply chains, and once again highlighted learnings as well as potential pit-falls as the industry moves forward.
Looking to the past to see the future
Moderator and Pharma.Aero’s Secretary General, Frank van Gelder, opened with a Churchill quote: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” The beginning possibly being both the learnings from the COVID-19 pandemic and adapting to a time of economic crisis, given that the webinar’s focus was a “look at the future of the COVID-19, the long term, both economically and technologically”. He went on to say that, in his view, the cornerstones for the future “should be visibility, flexibility, collaboration, and control” before handing over to Wouter Dewulf for a look at the “landscape after COVID-19” in the next ten to twenty years.
“I am not too impressed with the technological change”
Dewulf began with visuals showing aircraft and loading procedures in the 1960s and 70s, and directly comparing them with images from 2020, pointing out that overall the cargo industry has not really moved very far technologically over the past 60 years. Though the topic of digitalization is ever-present in conferences, the industry is very slow to adapt.
COVID-19 showed the flaws in supply chain processes, the loss of control when the shipment is no longer visible in one’s own system, the lack of information on the state of stocks at different locations, the availability of capacity, and routing possibilities. The future trend, therefore, will be “to connect the dots” along the chain, thus companies will opt for more stable relationships and alliances, sharing the relevant information within their structure. A point that was confirmed by Nallian’s Paul Delbar, who pointed to the “Factory to Pharmacy” view required when it comes to end-to-end logistics and digital visibility. He feared, however, that a move to alliances would possibly kill innovation, and that the industry would end up making the same mistakes as before. Dewulf agreed that, a consequence of protectionism could be detrimental to disruptive digital progress – a pitfall, perhaps, to look out for then.
Not too impressed by the economic effects either?
Looking back at the recessions in the 1980s and 90s, 9/11, and the Lehman brothers’ crash, along with their effect on world GDP, Dewulf appeared equally unimpressed at the estimated 7.8% decline in world GDP as a result of corona (compared to -3% in the other recessions): “It’s not such a game changer!” With a growing global focus on well-being and health, the pharma industry will benefit, with faster time to market for products, shorter testing periods, shorter supply chains, more simplified processes (“often too much marketing fuss is made about what is, essentially, a simple product to transport”, he said). There will be higher volumes of half-products rather than end-products, and air cargo rates will come down to match the value of a 787F freighter: $1/1kg. “The supply chain industry will become a 5-6 player oligopoly, through vertical alliances and consolidations.”
So, what did Madame Soleil say?
The prediction is that, in future:
- Asia-Pacific will be the place to be, production and consumption-wise
- In 20 years, life sciences supply chain volumes will triple, twice level of GDP growth
- Economies of scale, scope and density will drive alliances and M&A
- The life sciences supply chain sector will become an oligopoly
- Increased investment in R&D by governments will boost the sector, but also politicize the life sciences sector.
Other learnings from corona that are being taken forward, are the fact that until now, crisis management scenarios had not taken into account what happens when not just a region, but the entire world comes to a standstill when it comes to air cargo transports. Sea freight, which was also disrupted in some cases, is not always a viable alternative, so Risk Management processes require revision. Also, the need for reporting and monitoring along the chain: when and where does it make sense, how does it help, and what can be drawn from it? Digitalization will become even more important from now on.
Frank van Gelder’s cornerstones “visibility, flexibility, collaboration, and control” perfectly summarize the overall way forward.
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